As the title says, having the aspect ratio set to 1:1 is broken, the image ends up horizontally compressed. 256px seems to be getting used as the width rather than 320px.
When a game is running, toggling the borders on/off in the core options causes it to switch to the correct width. Alternatively, setting a custom ratio of 5x4 also worked as a temporary solution on my screen. (since 5x256 = 4x320, and 1:1 PAR should be 4x4)
Bugged: http://s1.postimg.org/kg2bs0af1/Bug.png Fixed: http://s28.postimg.org/fr29osnhn/Fixed.png